Municipalities need to do their part for businesses to participate in tax credit program
If something of potentially-great benefit to local business owners could be obtained without it costing taxpayers anything, what could possibly be negative about that?
Well, that’s the scenario three local municipalities find themselves in. We urge them to follow in the footsteps of their colleagues from the Derry Township Supervisors and the Mifflin County Commissioners in passing a resolution to make this a reality.
What is this, you ask? Let Mifflin County Industrial Development Corp. CEO Nick Felice and Downtown Lewistown Inc. director Jim Zubler explain.
“In an effort to maintain access to a powerful economic development program, the Mifflin County Industrial Development Corporation/MCIDC and Downtown Lewistown Incorporated/DLI have teamed up to keep the State’s Enterprise Zone/EZ Program active in Mifflin County. Officials from both groups have been working with four local/host municipalities (Lewistown Borough, Burnham Borough, Derry Township and Granville Township), and the county as a whole working to keep the program and its strong incentives.
“As a condition of the program, each host municipality must pass an enabling resolution affording companies, who operate in their jurisdictions, the ability to apply to the EZ Program. The EZ Program’s primary incentive is the ability to offer businesses tax credits in exchange for capital improvements and job creation activities. Say a manufacturing business plans to expand and needs a new $ 1 million widget machine. With the program in place, this company could apply for EZ tax credits equal to 25% or $ 250,000 of the total investment.
“The tax credits, available to companies through this designation, can be utilized in two ways. If the business has a high state tax liability, they can apply the credit directly to their state tax bill. Or, in the case of a younger company, or one that does not have a corporate structure that allows the credit usage, the better direction may be to sell the credit to a larger organization (banks, insurance companies, etc.) and receive an injection of cash for start-up, expansion or capital needs. Typically, these tax credits are sold for amounts between 85 cents and 95 cents on the dollar.
“Beyond the direct benefit to the business, the EZ promotes investment in communities determined by census data as having the greatest need. The four municipalities mentioned are certainly not destitute but each contains pockets where additional development would be welcomed. Mifflin County overall continues to rank in the bottom five in relation to overall poverty and income rates.
“The EZ program has no direct effect on local government tax revenues, in that the credits relieve businesses from all or a portion of State taxes while local real estate taxes are not impacted. Noting this, the Mifflin County Commissioners and Derry Township recently passed resolutions supporting continued operation of the Program. We are hopeful the remaining municipalities recognize the value of keeping the EZ Program in place, incentivizing investments by companies in their facilities.”
So, a program that could help defray some of businesses’ major costs needs only the approval of the local government to be available to businesses within that municipality? We fail to see a down side here.
It is our hope that the borough councils in Lewistown and Burnham boroughs as well as the supervisors of Derry Township will pass the resolutions at their next meetings and provide their local businesses a chance at some much-needed financial help.